For a Checkers franchisee, what information about the franchisee's directors and officers must be disclosed?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
res we prescribe at any time and from time to time to prevent unauthorized use or disclosure of the Confidential Information, including requiring any of your personnel who attends training or who has the ability to access our Confidential Information, to sign nondisclosure agreements in a form we prescribe or approve and delivering those agreements to us.
- 7.02 In-Term Covenants. You acknowledge that we have granted you the franchise in consideration of, and reliance upon, your agreement to deal exclusively with us. You therefore agree that, during the Term and any successor franchise term, neither you, any of your Owners, nor any of your or your Owners' Immediate Family will (without our prior consent, which consent we may condition or withhold for any or no reason):
- (a) have any direct or indirect controlling or non-controlling ownership interest as an owner whether of record, beneficially, or otherwise in a Competitive Business, wherever located or operating (except that equity ownership of less than five percent (5%) of a Competitive Business whose stock or other forms of ownership interest are publicly traded on a recognized United States stock exchange will not be deemed to violate this subparagraph);
- (b) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, wherever located or operating;
- (c) divert or attempt to divert any actual or potential business or customer of any Restaurant to a Competitive Business; or
- (d) engage in any other activity which, in our sole opinion, might be injurious or prejudicial to the goodwill associated with the Marks or the System.
- 7.03 Information Exchange. You must promptly disclose to us all recipes, processes, ideas, concepts, advertising and promotional materials, website pages and content, methods, techniques or materials used or useful to a fast-food restaurant business, whether or not constituting protectable intellectual property, that you create, or that are created on your behalf or for your benefit by your Owners or employees, in connection with the development or operation of your Restaurant (collectively, the "Materials").
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
Based on the 2025 Checkers Franchise Disclosure Document, franchisees must disclose certain information regarding their directors and officers to Checkers. Specifically, during the term of the franchise, neither the franchisee, their owners, nor their immediate family members can serve as a director or officer for a Competitive Business without prior consent from Checkers. A Competitive Business is defined as a restaurant deriving more than 20% of its revenue from selling hamburgers, cheeseburgers, and hot dogs in a fast-food format, or one that franchises similar businesses.
This requirement ensures that franchisees and their key personnel remain fully committed to the Checkers system and do not divert their efforts or knowledge to competing brands. The franchisee must get Checkers's consent before any of these individuals take on such a role, and Checkers can deny consent for any reason. However, owning less than 5% of a publicly traded Competitive Business does not violate this rule, provided neither the individual nor the franchisee controls the company.
Furthermore, franchisees must promptly disclose to Checkers all recipes, processes, ideas, advertising materials, website content, methods, techniques, or materials used in the fast-food restaurant business that they create or that are created on their behalf. This includes anything developed by the franchisee's owners or employees in connection with the operation of their Checkers restaurant. Checkers considers all such materials to be their exclusive property and part of the Checkers system.
This disclosure requirement allows Checkers to maintain uniformity and protect its intellectual property across all franchise locations. By mandating the disclosure of innovations and improvements, Checkers can integrate successful strategies into its broader system, ensuring that all franchisees benefit from the collective knowledge and experience within the network. This also prevents franchisees from using proprietary information to benefit competing businesses.